Strengthening Towards Resilience: Adani’s Strategic Initiatives Boost Credit Profile

Ahmedabad: Embedded within a significant milestone, through a series of strategic initiatives, the Adani Group has bolstered its liquidity position at the portfolio level with a cash balance of INR 42,115 crore at the end of the June quarter. The portfolio companies, by ensuring a robust foundation for their ambitious projects, have diligently focused on strengthening their financial position.

Contributed to positive transformation

As a result of a significant deployment of equity, by the end of the fiscal year 2019, the equity component increased from 40.16% to 55.77% of the total equity. By the end of fiscal year 2013, the deployed equity was INR 2,35,812 crore, significantly higher than the net debt of INR 1,87,087 crore.

EBITDA and total assets have rapidly increased at CAGRs of 18.13% and 21.7%, respectively, over the past four years (FY19 to FY23). In the June FY24 quarter, EBITDA grew by 42% year-on-year, surpassing the 40% growth in the entire FY23. Conversely, net debt has increased only by 14.56% CAGR, resulting in a continuous improvement in the leverage ratio.

For FY23, net debt to run-rate EBITDA decreased from 3.2x a year ago to 2.8x, as compared to the 3.2x target. At the end of FY23, the net debt to total assets ratio was 2.3x, and for FY23, the net debt to equity ratio was 0.8x. The debt coverage ratio for FY23 improved to 2.02x from 1.47x in fiscal year 2022.

More than half of the portfolio EBITDA comes from companies with ratings equivalent to India’s sovereign rating, which has enabled consistent access to the capital market. In FY2023, the core infrastructure and utility platforms accounted for 83% and 86% of the total EBITDA, respectively. In FY23, contractual businesses accounted for 82% of the portfolio’s EBITDA. This substantial contribution enhances earnings stability and long-term visibility.

A diversified financing mix has successfully mitigated concentration risk, both internationally and domestically, across banks, capital markets, and other sources.

The conservative strategy has provided robust maturity coverage at the promoter level. The maturity coverage profile for all companies is longer than their respective maturity period, ensuring financial stability and mitigating systemic risks.

For fiscal year 2013, the free cash flow plus cash was 2.72x compared to the average debt maturity of 6.55 years, effectively ending refinancing risk. The free cash flow coverage of EBITDA at a low cost of funding has reduced debt service cost.

Through a 10-year equity program with long-term global investors established in 2016, the Adani portfolio has attracted USD 9.5 billion since 2019 (excluding the recent sale of stake in Adani Power to GQG Partners). This program has endorsed margin-linked equity-supported financial commitment with pre-payment, which enhances financial security.

At the promoter level, through a secondary market transaction from March 2023, the unit has generated INR 30,900 crore (excluding the recent sale of stake to GQG Partners in Adani Power).

About the Adani Group

Based in Ahmedabad, India, Adani Group is the largest and fastest-growing portfolio of diversified businesses in India, with interests in logistics (ports, airports, logistics, shipping, and rail), resources, power generation and distribution, renewable energy, gas, and other industries. The Group attributes its success and leadership position to its core vision of “Nation Building” and “Growth with Goodness,” which serves as a guiding principle for sustainable development. Based on principles of stability, diversity, and shared values, the Group is committed to environmental protection and community improvement through its CSR programs. More information is available on the company’s website.